Student Loan Forgiveness May Not Happen, but You Still Shouldn’t Pay Your Loans Right Now

Photo to accompany story about student loan debt. Getty Images
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Here’s some non-traditional financial advice for you: Think twice before paying down your federal student loans this year. 

There are better uses for your money right now, and the increasingly uncertain fate of President Biden’s student loan forgiveness plan doesn’t change a thing, according to Robert Farrington, a student loan expert and founder of The College Investor. 

“Never give the government any money that they are not legally entitled to. It does not benefit you,” Farrington said this week during a webinar with NextAdvisor about student loan forgiveness. “There’s no reason to. Your interest is set at zero. Your monthly payment is set to zero. It’s just costing you money every single month that you didn’t have to spend.”

Use this time to build an emergency fund, pay down private student loans or other high-interest debt, invest, or save for other long-term goals like buying a house. If you want to put money toward your student loans, put that monthly payment in a high-yield savings account and let it accumulate interest until the student loan payment pause ends — and then make a lump-sum payment all at once. 

“You can deploy that money in other ways, whether it’s saving for retirement or buying a house,” he says. “Or you could just put it right back to your loans.”

Farrington’s advice comes at a weird moment in history for student loan borrowers. The president’s student loan forgiveness plan is temporarily on hold due to several lawsuits at the federal level, and it’s unclear if the plan will be able to move forward. Back in August, Biden announced a plan to cancel up to $20,000 in federal student loan debt for 43 million borrowers. Biden also said borrowers would be able to continue skipping their monthly payments until Dec. 31.

Farrington says he wouldn’t be surprised if the student loan payment pause was extended for an eighth time because of the ongoing legal challenges with Biden’s student loan relief plan.

“It appears extending the pause could be back on the table,” he says. “However, borrowers should still prepare to resume payments because, as we know from the last few extensions, the actual extension might not come until days before payments are due.”

As a borrower, you don’t want to be unprepared if payments resume in January. Sign up for student loan relief updates with the Department of Education, confirm your loan servicer via and update your contact information, and look at your current budget and make adjustments. If you’ve made any student loan payments since March 2020, request a refund through your loan servicer as soon as possible and hold it in a high-yield savings account until there’s an update on the forgiveness plan. 

But even if student loan payments come due again in early 2023, Farrington doesn’t recommend working extra hard to erase your government loans this year. 

“There’s so much uncertainty that I wouldn’t want the government holding onto my money” Farrington says. “You could be saving or investing instead.”